The U.S. economy expanded at a robust 4.3% rate in the third quarter of 2024, the strongest growth in two years. The estimate, released Tuesday by the Bureau of Economic Analysis (BEA), was delayed by the government shutdown that postponed the original October 30 deadline.
Robust Growth After a Slow Start
The 4.3% rise covers July, August, and September, and if confirmed, would be the highest quarterly growth for the U.S. economy since the same period in 2023. Analysts and economists surveyed by Dow Jones had expected a 3.2% increase, making the actual reading a significant surprise.
Key Drivers of Expansion
The BEA attributed the growth to “increases in consumer spending, exports, and government spending,” while noting that imports, which subtract from GDP, decreased. Consumer spending rose 3.5% on an annual basis, the best rate since the end of 2024, and was driven largely by services such as health care and international travel.
Within health care, both outpatient services and hospital and nursing home services saw gains, according to the bureau. Exports and government spending also contributed, but the decline in imports helped lift the overall figure.
Consumer Spending and Debt
While consumer spending surged, credit card balances climbed by $24 billion during the third quarter, reaching a level 5.75% higher than a year ago, per the Federal Reserve Bank of New York’s 2025 third-quarter data. Citigroup economists, after reviewing the report, noted that “consumer spending had been volatile this year and the softening labor market implies a slower pace of spending next year.”
The rise in debt reflects households’ attempts to maintain consumption amid rising costs. The BEA’s data show a growing divide: wealthy households have not altered their habits despite higher living costs, while middle- and lower-income households have cut back.
Trump’s Reaction and Inflation Debate
Former President Donald Trump posted on Truth Social after the announcement, writing: “The TARIFFS are responsible for the GREAT USA Economic Numbers JUST ANNOUNCED,” and added that “they will only get better!” He also claimed “NO INFLATION.” However, inflation data show a rise to 3% in September, before falling to 2.7% in November.
Trump’s assertion that inflation has disappeared is contradicted by the November decline, which economists widely believe is due to the lack of data collected during the shutdown.
Investment, AI, and Market Reaction
Paul Ashworth, chief North America economist at Capital Economics, observed that “investment in non-residential structures contracted at a 6.3% pace,” suggesting that the AI boom may have taken a step backward after driving GDP growth in the first half of the year. He cautioned that more data might be needed before a definitive conclusion.
Stocks traded near a flat line following the release, and Treasury yields rose slightly. The market’s muted reaction underscores the complexity of translating economic data into investment decisions.
Sentiment and Confidence
Consumer sentiment paints a more nuanced picture. The University of Michigan’s Surveys of Consumers for December found that sentiment improved compared to November, but when measured against December 2024, it dropped by nearly 29%.
The Conference Board’s Consumer Confidence Index for December also fell, declining 3.8 points from the previous month. Dana M. Peterson, chief economist at the Conference Board, noted that inflation and tariffs were among the top factors affecting consumers’ views of the economy.
An NBC News Decision Desk Poll released in December revealed mixed feelings about personal finances: 35% of respondents said their finances are worse now, 41% said they are about the same as last year, and only 24% reported better financial conditions.
Year-to-Year Context
With the new data, the average growth rate for the first three quarters of 2024 is 2.5%. The economy contracted 0.6% in the first quarter, then grew 3.8% in the second quarter. The overall 2024 average growth rate is 2.4%, compared with 3.4% in 2023.
These figures illustrate the uneven path of the economy, with a sharp rebound in Q3 offsetting earlier weakness.
Key Takeaways
- The third-quarter GDP grew 4.3%, the strongest quarterly growth in two years.
- Consumer spending rose 3.5% annually, driven by services and health care.
- Credit card debt increased $24 billion, reflecting higher household borrowing.
- Investment in non-residential structures contracted 6.3%, raising questions about the AI boom.
- Consumer confidence fell sharply in December, despite improved sentiment versus November.
The data reveal a resilient economy that is still grappling with inflation, tariffs, and shifting consumer behavior. While growth has accelerated, the mixed signals from debt, investment, and sentiment suggest that the road ahead may still be uneven.
Closing
The BEA’s initial estimate sets a new benchmark for U.S. economic performance in 2024. As the bureau releases revised figures, analysts will watch closely for how consumer spending, investment, and external factors continue to shape the nation’s economic trajectory.
